S&P Upgrades Nigeria’s Credit Rating to ‘B’ — First Upgrade in 14 Years

Nigeria just got its first sovereign credit rating upgrade in 14 years, and the timing could not be more significant for an economy that has weathered storm after storm since the last positive movement.

S&P Global Ratings announced on Friday that it was lifting Nigeria’s long-term foreign and local currency sovereign credit ratings from ‘B-‘ to ‘B’ with a Stable Outlook. The move signals growing confidence in the country’s economic trajectory under the reform agenda of President Bola Tinubu.

The upgrade comes on the back of three years of sustained structural reforms, most notably the liberalisation of the foreign exchange market in 2023, improved crude oil production, and the ramp-up of domestic refining capacity through the Dangote Refinery.

According to S&P, these reforms have strengthened investor confidence, improved access to foreign exchange, and boosted Nigeria’s balance of payments position. The agency expects Nigeria’s current account surplus to improve to 5.8 percent of GDP in 2026, up from 4.8 percent in 2025.

The Dangote Refinery plays a central role in this improved outlook. Now operating at about 650,000 barrels per day, the facility is helping reduce fuel imports while positioning Nigeria to export refined petroleum products — a dramatic shift from decades of importing nearly all refined fuel despite being a major crude producer.

Debt burden easing

On the fiscal front, S&P noted that Nigeria’s debt servicing burden has moderated. The debt-to-revenue ratio is projected to fall to 33.8 percent in 2026 from roughly 50 percent in 2023, supported by tax reforms and improved remittances of petroleum revenues to the federation account.

Interest expenditure is expected to average 21.4 percent of revenue until 2029, down sharply from 39.0 percent in 2023. The government has also ruled out reintroducing fuel subsidies, a policy that historically drained public resources and encouraged smuggling.

Foreign exchange reserves have climbed to about $50 billion as of March 2026, compared to $33 billion in 2023. This buildup reflects exchange-rate reforms, reduced imports, higher oil output, and increased refining capacity.

Clouds on the horizon

Despite the positive revision, S&P flagged several risks. The 2027 general elections could temporarily widen the government deficit to over 4 percent of GDP due to election-related spending and infrastructure commitments.

Inflation remains a stubborn challenge. The agency projects it will average 17.7 percent in 2026 before easing to below 10 percent by 2028. Rising global fuel prices linked to Middle East tensions could sustain price pressures and weigh on household incomes.

Poverty and weak socioeconomic conditions also continue to pose risks to the outlook. While macroeconomic indicators are improving, the translation to everyday prosperity for Nigerians remains uneven.

Government reaction

Finance Minister Taiwo Oyedele welcomed the upgrade, describing it as reinforcement of growing international confidence in Nigeria’s economic reforms.

“These independent assessments collectively affirm that the difficult but necessary reforms undertaken under the leadership of President Bola Ahmed Tinubu are yielding measurable results,” Oyedele said in a statement.

The minister stressed that the administration remains committed to fiscal discipline and market-driven reforms, with no plans to reintroduce inefficient fuel subsidies.

S&P indicated it could raise Nigeria’s ratings further over the next 12 to 24 months if fiscal reforms continue to improve government revenue and reduce external imbalances. However, a reversal of key reforms, widening deficits, or rising debt-service costs could trigger a downgrade.

Sources: TheCable, BusinessDay, Premium Times, Nairametrics